UK Interest Rates May Reach 315-year low

by Dave Keating | January 8, 2009 at 01:48 am

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The Uk may reach a decision to lower its interest rates to the lowest in the Bank of England's 315 year history today. The move would be designed to stimulate the economy and avoid deflation.

The Bank of England is expected to cut interest rates to the lowest level in its 315-year history when it makes its monthly decision later.

With rates currently at 2%, the Bank's Monetary Policy Committee is tipped to announce a reduction of between 0.5 and one percentage point.

This would be the first time since the Bank was founded in 1694 that rates have fallen below 2%.

It comes as the Treasury denied reports it was planning to inject more money.

A number of newspapers said the step was being considered once interest rates fell close to zero as a tactic to help both stimulate the economy and avoid deflation.

Treasury sources said that while the move had not been ruled out, it was not currently on the agenda.